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The American Stock Exchange has appointed one of its board members to lead it toward demutualization following growing technology pains in an industry beset with consolidation.

Patricia Rado was appointed president and chief operating officer of the options exchange. Rado retired from her former position as controller at energy company Public Service Enterprise Group in January. In the new post, Rado will report to Neal Wolkoff,chairman and chief executive officer.

In August, Rado, who was serving on the American Stock Exchange board, was asked to chair a task force looking into technology problems at the exchange. In June, the exchange had to shut down three times over two weeks, as it struggled with its new electronic platform AEMI.

The exchange faces significant challenges in the months ahead. It is in the process of shedding its current member ownership structure to become a for-profit corporation.

American Stock Exchange officials are also hoping that Congress will pass legislation which would ease securities regulations for small cap companies. The majority of the exchange’s listed companies fall into that category with about $50m to $500m in capitalization.

The legislative effort to lift regulation that is too expensive for smaller companies is, in part, a response to those companies fleeing to overseas exchanges, such as the London and Toronto stock exchanges.

But the American Stock Exchange's biggest challenge may be a trend toward consolidation. As one of the few independent exchanges, it is far behind its rivals such as the International Securities Exchange or the Intercontinental Exchange and may look like an interesting target to other derivatives exchanges.